Question

The following were selected from among the transactions completed by Babcock Company during November of the current year. Babcock uses the net method under a perpetual inventory system.

Nov.	3	Purchased merchandise on account from Moonlight Co., list price $89,000, trade discount 30%, terms FOB destination, 2/10, n/30.
	4	Sold merchandise for cash, $38,210. The cost of the goods sold was $20,810.
	5	Purchased merchandise on account from Papoose Creek Co., $51,550, terms FOB shipping point, 2/10, n/30, with prepaid freight of $730 added to the invoice.
	6	Returned $14,000 ($20,000 list price less trade discount of 30%) of merchandise purchased on November 3 from Moonlight Co.
	8	Sold merchandise on account to Quinn Co., $15,010 with terms n/15. The cost of the goods sold was $10,190.
	13	Paid Moonlight Co. on account for purchase of November 3, less return of November 6.
	14	Sold merchandise on VISA, $231,570. The cost of the goods sold was $142,060.
	15	Paid Papoose Creek Co. on account for purchase of November 5.
	23	Received cash on account from sale of November 8 to Quinn Co.
	24	Sold merchandise on account to Rabel Co., $54,800, terms 1/10, n/30. The cost of the goods sold was $33,850.
	28	Paid VISA service fee of $3,580.
	30	Paid Quinn Co. a cash refund of $6,420 for returned merchandise from sale of November 8. The cost of the returned merchandise was $3,140.

Journalize the transactions. Refer to the Chart of Accounts for exact wording of account titles.

CHART OF ACCOUNTSBabcock CompanyGeneral Ledger

	ASSETS
110	Cash
121	Accounts Receivable-Quinn Co.
122	Accounts Receivable-Rabel Co.
125	Notes Receivable
130	Inventory
131	Estimated Returns Inventory
140	Office Supplies
141	Store Supplies
142	Prepaid Insurance
180	Land
192	Store Equipment
193	Accumulated Depreciation-Store Equipment
194	Office Equipment
195	Accumulated Depreciation-Office Equipment

	LIABILITIES
211	Accounts Payable-Moonlight Co.
212	Accounts Payable-Papoose Creek Co.
216	Salaries Payable
218	Sales Tax Payable
219	Customer Refunds Payable
221	Notes Payable

	EQUITY
310	Common Stock
311	Retained Earnings
312	Dividends

	REVENUE
410	Sales
610	Interest Revenue

	EXPENSES
510	Cost of Goods Sold
521	Delivery Expense
522	Advertising Expense
524	Depreciation Expense-Store Equipment
525	Depreciation Expense-Office Equipment
526	Salaries Expense
531	Rent Expense
533	Insurance Expense
534	Store Supplies Expense
535	Office Supplies Expense
536	Credit Card Expense
539	Miscellaneous Expense
710	Interest Expense

Answer 1

Babcock Company
Journal entries
Date	Account	Debit	Credit	Calculation
3-Nov	Merchandise Inventory	62,300		=89,000*(1-30%)
	Accounts Payable-Moonlight Co.		62,300
4-Nov	Cash	38,210
	Sales		38,210
	Cost of goods sold	20,810
	Merchandise Inventory		20,810
5-Nov	Merchandise Inventory	52,280		=51,550+730
	Accounts Payable-Papoose Creek		52,280
6-Nov	Accounts Payable-Moonlight Co.	14,000
	Merchandise Inventory		14,000
8-Nov	Accounts Receivable-Quinn Co.	15,010
	Sales		15,010
	Cost of goods sold	10,190
	Merchandise Inventory		10,190
13-Nov	Accounts Payable-Moonlight Co.	48,300		=62,300-14,000
	Cash		47,334
	Merchandise Inventory		966	=48,300*2%
14-Nov	Cash	231,570
	Sales		231,570
	Cost of goods sold	142,060
	Merchandise Inventory		142,060
15-Nov	Accounts Payable-Papoose Creek	52,280
	Cash		51,249
	Merchandise Inventory		1,031	=51,550*2%
23-Nov	Cash	15,010
	Accounts Receivable-Quinn Co.		15,010
24-Nov	Accounts Receivable-Rabel Co.	54,800
	Sales		54,800
	Cost of goods sold	33,850
	Merchandise Inventory		33,850
28-Nov	VISA service fees	3,580
	Cash		3,580
30-Nov	Sales returns and allowances	6,420
	Cash		6,420
	Merchandise Inventory	3,140
	Cost of goods sold		3,140